Appeal from the Circuit Court of Cook County Honorable Peter Flynn, Judge Presiding.
The opinion of the court was delivered by: Justice O'mara Frossard
This case arises from a dispute over a medical insurance policy issued by defendant United Security Life Insurance Company of Illinois to plaintiff Roman Styzinski. Plaintiff filed a complaint against defendant alleging breach of contract based on its failure to pay, pursuant to that policy, approximately $100,000 of medical expenses he incurred after he was injured while driving a motorized two-wheel vehicle. Defendant filed a three-count first amended counterclaim. Count I alleged that plaintiff made a misrepresentation on his application for medical insurance when he responded "no" to a question asking whether he had driven a motorcycle during the preceding two years or contemplated driving one in the future. The count further alleged that his misrepresentation was material and therefore required rescission of the insurance contract. Counts II and III alleged that even if the insurance contract was valid, two of its exclusionary provisions regarding injuries sustained while engaged in illegal activity barred plaintiff's claim. Specifically, Count II alleged plaintiff operated his vehicle at the time of the accident under the influence of marijuana and/or with marijuana in his bodily systems in violation of section 11-501(a)(5) of the Illinois Vehicle Code (625 ILCS 5/11-501(a)(5) (West 1996)). Count III alleged plaintiff violated Illinois laws which made it illegal to operate a motorcycle in the place and manner undertaken by plaintiff at the time of the accident.
Defendant subsequently filed a motion for summary judgment based on the same claims alleged in its first amended counterclaim. Thereafter, the trial court issued a written order granting defendant's motion for summary judgment, entering judgment for defendant on count I of its first amended counterclaim and rescinding the contract, and dismissing counts II and III "as moot." Plaintiff appeals the entry of summary judgment, contending that the trial court erred by concluding he made a material misrepresentation on his application for insurance. Plaintiff argues that his answer to the motorcycle-related question was accurate because the vehicle he was operating at the time of his accident was an off-road dirt bike rather than a motorcycle. Defendant responds that the trial court properly entered summary judgment based on plaintiff's misrepresentation and cross-appeals, alternatively contending that the entry of summary judgment should be affirmed because plaintiff's claim was barred by the exclusionary provisions identified in its first amended counterclaim and summary judgment motion. Plaintiff subsequently filed a motion in this court to strike defendant's brief on cross-appeal and dismiss its cross-appeal on the grounds that its brief failed to address "mootness," the basis on which the trial court dismissed counts II and III of defendant's first amended counterclaim.
Plaintiff, a certified mechanic, operated a business that repaired small engines at the time he applied to receive medical insurance from defendant. Plaintiff submitted his written application for insurance on December 4, 1996, and answered "no" to the following question on the application:
"Does any person named above contemplate or has within the last two years been engaged in the following activities: Aviation, Hang Gliding, Parachuting, Parasailing, Racing (any kind), Motorcycle Driving or Racing, Rodeo Activities, Competitive Skiing, Scuba or Sky Diving, or other hazardous sports?" (Emphasis added.)
Plaintiff stated during his deposition that insurance agent Ron Yocum helped him fill out the application and read the questions out loud to him "in a fast kind of motion, 'yes' or 'no.' " After Yocum read the motorcycle-related question at issue, plaintiff told Yocum he occasionally test-drove dirt bikes. Plaintiff also told Yocum that he repaired go carts and golf carts and assumed Yocum knew that he also worked on vehicles such as motorcycles or dirt bikes. Plaintiff stated that Yocum told him nontitled, nonhighway vehicles did not qualify as motorcycles under the application and advised him to answer the question "no." In an affidavit attached to plaintiff's complaint, Yocum acknowledged he assisted plaintiff with his insurance application and stated that plaintiff told him he had a license to drive a motorcycle but had not driven one in 10 years and had no intention of driving one. Accordingly, Yocum advised plaintiff to answer the question "no."
Plaintiff signed the following attestation included on the application:
"I represent the statements I have made herein are complete and true. I understand the following: (a) if any information on this application is incorrect, this coverage may be voided[.]"
Defendant accepted the application and issued the policy in question to plaintiff, effective February 1, 1997. On November 3, 1997, plaintiff was injured while he was operating a Suzuki DR370, a motorized, two-wheel vehicle, which could reach top speed of approximately 50 miles per hour. Plaintiff was driving the vehicle off-road along a gravel railroad bed when he lost control of it and struck a tree. Plaintiff subsequently submitted a written claim statement to defendant in which the accident was noted as "motorcycle accident off road dirt bike." Defendant denied plaintiff's claim for medical expenses based on his "no" answer to the question on the application for insurance asking whether he had driven a motorcycle during the preceding two years or contemplated driving a motorcycle in the future. In its letter of denial, defendant stated that "a copy of [plaintiff's] application was attached to, and made part of, [his] policy." Defendant asserted that had plaintiff correctly answered the question regarding his use or contemplated use of a motorcycle, it "would have applied an Elimination Endorsement to [motorcycle driving] at that time."
Following the denial of his claim under the policy, plaintiff filed a complaint alleging that defendant breached the subject insurance contract by refusing to pay medical expenses arising from his injury. Defendant, in turn, filed a three-count first amended counterclaim. Count I sought rescission, alleging that defendant's "no" answer to the motorcycle-related question on the application constituted a material misrepresentation. Counts II and III both sought a declaratory judgment stating that two exclusions in the policy regarding injuries sustained while engaged in illegal activity barred plaintiff's contractual right to recover medical expenses arising from his injury.
Defendant subsequently filed a motion for summary judgment seeking rescission of the contract based upon plaintiff's "no" answer to the motorcycle-related question in the application for insurance. In support of its contention that this answer constituted a misrepresentation, defendant attached to its motion plaintiff's deposition. Plaintiff stated during his deposition that at the time he completed the insurance application, he had a license to drive a motorcycle and owned a 200 Honda street bike as well as the off-road bike involved in the accident. Plaintiff received the street bike in exchange for tuning up a customer's tractor but had never driven it. Plaintiff stated he repaired approximately a dozen motorcycle or dirt bikes per year and test-drove all of them. He stated that during 1996 he test-drove a motorcycle that he had serviced and test-drove a dirt bike or motorcycle that he worked on in 1997. When asked whether he operated a dirt bike or motorcycle during the two years before the date on which he submitted his insurance application, plaintiff answered, "Again I must have to test them, yes." Plaintiff subsequently indicated that when he test-drove motorcycles and off-road cycles prior to submitting his application for insurance, he always did so off-road. Plaintiff stated that at the time he applied for his policy he had no intention of driving a motorcycle on the streets and had not operated a motorcycle upon a highway in the past two years.
In support of its contention that plaintiff's misrepresentation was material, defendant attached to its motion for summary judgment the deposition of Martin Pinkowski, an underwriting manager for defendant. As an underwriting manager, Pinkowski evaluated the risks presented by insurance applications, determined whether a policy should be issued, and if so, whether it should be issued with an endorsement limiting or changing the terms of coverage. Pinkowski stated that had plaintiff answered "yes" in response to the motorcycle-related question on the insurance application, defendant would have asked follow-up questions regarding his use of motorcycles and issued an elimination endorsement excluding coverage for motorcycle injuries.
During his deposition, Pinkowski identified the Lincoln National Life Underwriting Manual as a guide used by several insurance companies throughout the country which contains information on how to evaluate either medical or ...